Implications for sanctions and the dark fleet under Trump 2.0

In recent years, restrictions on permissible trades, most notably in the wet side of the business, have led to dramatic shifts in cargo flows, which in turn, have stretched existing vessel supply, with the impact of buoying particular sectors. A mid-December online discussion organised by Pole Star Global, a provider of vessel location/ tracking services and compliance tools, delved deeply into what might happen, and how maritime companies might “de-risk” their activities.

With geopolitical turmoil continuing to impact maritime trades, the role of data and analytics providers is an important one. In a commentary for the Columbia University Center on Global Energy Policy, Richard Nephew, a Senior Research Scholar (with a diplomatic background) wrote that:  “conducting relational analyses of how companies or common business partners are linked, incorporating investigative journalist reporting, and using datasets such as those identifying beneficial owners can all contribute to making sanctions cases stick without resorting to cloak-and-dagger tactics.”

The views expressed in the hour-long discussion, titled “Navigating Sanctions: Implications of Trump's Presidency for Global Trade” were wide ranging, with the panelists from the legal and security worlds offering perspectives on what might happen after January 20th. In particular, the panelists looked at potential for multi-lateral activities versus the possibility of unilateral actions by the Trump administration.

There was also a discussion of how the US Department of Justice might change its methodologies re prosecuting offenders, and whether compliance programs might be adjusted, perhaps putting additional pressure on Iran and Venezuela, with great uncertainties surrounding Russia and China facing market participants.

The “Dark Fleet” of tankers was the subject of some discussion, with panel member David Tannenbaum, with career experience at Office of Foreign Assets Control OFAC suggesting a possibility of a “mass designation of large numbers of dark fleet vessels” as sanctioned entities. He said: “I wouldn’t be surprised if in late February or early March, that we had two or three hundred vessels drop in a single day” as part of efforts to restrict flows of Iranian oil. Tannenbaum also brought up the possibility that OFAC might designate specific flags or insurance providers as sanctioned entities.

On the webinar, participant Captain Steve Bomgardner, Pole Star Global’s Vice President - Shipping and Offshore, with a background working with Flag States and also with solution providers serving the US offshore segment, offered some practical and cogent observations, following up on Tannenbaum’s views. He told the webinar audience, “I think that you’re going to see an increase in P & I premiums, based on the uncertainties of international relations”. Tannenbaum added: “There is consolidation in the P&I market already…with pressure of sanctions, various flags and insurance providers will have to shed tonnage…that means that P&I premiums will up.” Bomgardner also offered that: “You are going to have operational costs for carriers serving US routes…you are going to have reconfiguration of [line] networks…based on proposed tariffs”, before emphasizing the similarities on impacts of tariffs and sanctions.

Towards the end of the webinar, Baumgardner, whose past experience included work with clients such as Harvey Gulf Marine and Hornbeck Offshore- which both devised creative ways to reduce emissions, said: “I think where we’ll see some issues with Trump 2.0 will be with a slower decarbonisation push from the US”. He noted that increased fossil fuel demand could indirectly impact sanctions policies